In The Long Run, The Rest Of The World May Gain From California's Severe Drought

Most of us probably know that California has been facing drought conditions for some time. 2013 was the driest year since they have been keeping records, and that situation just keeps getting worse, according to the U.S. Drought Monitor, which monitors this situation closely.

With little precipitation over the critical winter months, when Sierra snowpack usually gets replenished, the state has now moved into a situation where 100% of its 163,000 square miles is in one of the three worst stages of drought, with the majority being characterized as “Exceptional Drought.”

Lakes have dried up. Cities are rationing water. Even hatching salmon have had to hitch rides on boats to the ocean, as there is not enough downstream flow to help them to get there on their own. And then of course there are the wildfires.

Image: www.droughtmonitor.unl.edu

In the short-term, none of this is good for California or for the U.S. Food prices will rise and the national economy will be harmed in numerous other ways. Yet, in the longer run, the impacts might be beneficial for the rest of us, and perhaps California as well.

California May Take The Environmental Lead Once Again

Here’s why: nobody does anything about a problem until it gets severe enough to worry. If you don’t believe that, witness the tepid global response to the scientific reports concerning climate change. But when it really hits the fan, people get moving. And few get moving more quickly, more proactively, or more creatively at solving environmental problems than Californians. In addition, California’s economy is large enough that it affects the rest of the country, and often has a residual impact on the global economy.

Take a look energy: in response to the energy crisis in the 1970s and 80s, California responded with the first appliance efficiency standards, which contributed to the eventual adoption of national standards in 1988. And although other factors such as demographics had a part to play, the result of an engaged and protracted effort to improve energy efficiency led to an interesting result: while the rest of the country’s energy use grew proportionally to GDP, California’s energy use stayed nearly flat as its economy grew, and consumption per person fell dramatically.

Let’s take another example – that of air pollution: in the 1950s and 60s the Los Angeles Basin suffered some of the worst air quality conditions in the developed world. In response, the California Air Resources Board was formed to administer the Federal Clean Air Act. While LA and other areas still have air quality challenges, they have done much to clean up their act. And they exported their know-how to other regions of the world, such as Chile. Furthermore, standards adopted in California often become the coin of the realm in other states. For example, Section 177 of the Clean Air Act gives other states the authority to adopt California’s low emission vehicle standards, something New York and other states have done.

Finally, consider clean energy technologies. At the state level, California vastly outpaces its competitors, both at the state and university level. In fact, in the first quarter of this year, California had 85 clean energy patents. This compares to 115 for Japan, and 43 from Michigan – it’s next closest U.S. competitor. Of course a large population helps, but there is also an orientation towards problem solving that appears somewhat unique to that state and culture. California has Tesla, many of the major solar companies, a good chunk of the energy storage companies, and a preponderance of the venture capital funds as well.

California will face this issue first (it has faced the issue for a long time, but not with today’s urgency), but it is highly unlikely the rest of us will be immune in the long run. Since there is a finite and dwindling supply of water, with too many claimants, that spells a huge business opportunity. And business opportunities are something that Californians are excellent at responding to.

Perhaps the same level of fervor and innovation that has been applied to the area of energy can be applied to the area of water. Already, some interesting projects are underway, including a proposed $100 million, six-mile pipeline to move treated wastewater from the municipalities of Modesto, Turlock,
Ceres, Denair and Keyes, to irrigate 45,000 acres of farmland in Stanislaus, Merced, and San Joaquin counties. This would provide badly needed water to agriculture while helping avoid the cost of increasing environmental standards for discharging into the San Joaquin River.

Meanwhile, San Francisco is planning on spending $56 million to put meters in approximately 180,000 homes and businesses, while giving them an on-line real-time view of how much water they are using (water smart meters are a relatively new technology, and they have been installed in less than 10% of the state’s water agencies). San Francisco's planners believes this will help them to achieve its voluntary conservation goal of 10%. With Sierra snowpack at less than 10% of normal, if there is no relief, the city indicates it may have to move to water rationing.

New Players In The Residential Water Arena

New companies focused on water issues are being spawned as well.

Peter Yolles, CEO and Founder of WaterSmart Software - a software company that aids municipal and investor-owned water utilities in helping engage with customers to improve water-use efficiency – noted in a recent conversation that the water industry is relatively unsophisticated with communications methodologies and in managing relationship with customers.

Yolles created his company “to bring new technologies to municipal water suppliers,” and noted that “a combination of behavioral science, data analytics, and cloud computing now make this possible.”

WaterSmart offers a platform to water utilities using behavioral science to persuade people to change behavior.

They learn about their water use, install devices and change habits. This reduces costs to consumers for water and energy and also reduces costs to water utilities themselves.

The company currently has 25 utility customers across the country, and provides water reports to over 200,000 homes today, while processing water meter data for over 1 million homes nationwide.

Image: WaterSmart

The product and approach yields results: Yolles observed that a recently conducted independent evaluation of East Bay Municipal Water District found consumers receiving home water reports reduced consumption by an average of 5% within the first year. The program also had a positive effect on customer satisfaction, with customers twice as likely to rate the utility as excellent on providing water and money-saving information. They were also three times as likely to adopt water conservation programs offered by utility.

The WaterSmart Software is compatible with any back end meter data platform and any meter read interval (from monthly to hourly data). Yolles notes that the improved information can yield immediate results.

We have a smart meter interface where people can view water consumption information on tablets or smartphones, and receive leak alerts. Within the first week of deployment in Sacramento, we identified a dozen ongoing leaks, including one at 70 gallons per hour. We were able to alert the utility and homeowner about the problem and they fixed the leak.

That feature is valuable, says Yolles, since 25% of homes may have a leak at any one time. Peer comparisons are also utilized.

We provide context concerning how much water households use, how they compare with neighbors and personalized recommendations to save water and money. The more frequently people are provided information about water use, the more likely they are to change their behavior.

WaterSmart – with 20 employees in San Francisco - is seeing international interest in the product as well, with inquiries from Europe, Australia, the Middle East, and Asia.

Dropcountr, another start-up company addressing similar issues has taken another approach to the water industry’s customer engagement program, leveraging the unique opportunities of a mobile platform. The idea is to empower residents with daily water usage information, rather than waiting 1-3 months for a bill to come and missing the opportunity to save.

CEO Robb Barnitt commented in a recent conversation that 89% of the time spent on mobile devices is in an app environment, so there is an untapped opportunity for utilities to proactively engage with customers, in addition to their paper water bill. The Dropcountr app affords timely personalized messages for each individual water user trying to conserve money and resources. Push based alerts or
SMS can warn customers before they hit peak water usage and/or experience damaging water leaks. Emergency drought alerts, targeted rebates, and watering restrictions can all be communicated for the first time instantly with users.

For example, ‘Wednesday and Friday are days you can water your lawn.’ It’s customizable, concise and actionable. Or with granular data we can identify a potential leak very quickly.

Barnitt notes that the use and adoption of such technology is likely to grow over time, as we continue to embrace the apps on our mobile devices.

As a society we are growing more accustomed to tracking our lives, from finance to fitness, and from energy to water. You’d be surprised at how many people want and expect to be able to monitor their consumption, down to the appliance level. “

Akin to energy conservation, his company is focused on presenting actionable data to water users, leveraging proven methods of behavioral science. Barnitt observes,

Similar to energy, most folks have no idea how much water they use and if asked to guess, they estimate that they use less than they actually do and they always think they use less than their peers…. Most people look at their bill and don’t know if their usage is reasonable and appropriate.

Image: Dropcountr

Founded in early 2013, the company has contracts with the California municipalities of Folsom and Los Altos Hills, with activities launching shortly. The initial focus is targeted on California, since the problem is so severe and the regulatory environment promotes conservation initiatives, but Dropcountr could really be a solution anywhere and plans to expand to Texas and Colorado next.

For the first time ever, California utilities are mandated to report monthly water use, so Dropcountr wanted to help streamline this cumbersome process and designed an administrative dashboard that the City of Folsom and other utilities will use to aggregate the required data for an easy export. Barnitt notes,

We’ve tailored our admin dashboard to meet custom utility needs, but at the core be simple and intuitive. Like
Apple, we are focused on design and simplicity, which translates to usability and value for utilities. Utility staff can quickly and easily assess their customer accounts using our map and table views, then group customers for targeted and cost-effective notifications via our mobile platform. While the design is simple, the cloud-based analytics provide powerful insights as to what’s needed for proactive solutions.

Solutions For Agriculture

Agricultural water use also represents a big target, since that is where 80% of the state’s water is used. Start-up company WaterFX is using concentrated solar stills to desalinate water from irrigation canals that are laden with salts and other impurities from the drainage water. It recently signed a contract with Panoche Water and Drainage District to deploy its technology. Founder and Chairman, Aaron Mandell estimates that such technologies could ultimately provide 8% of all the water used in California. Mandell says,

Irrigation represents an enormous opportunity to reuse more water - we do a great job of being efficient with our fresh water, but we can do much more when it comes to tapping into water that isn't useable because it contains salt.

Meanwhile, TerrAvion – overflies fields on a weekly basis and allows farmers to monitor growth and better adjust irrigation – do their part to reduce water consumption. The company provides an ‘aerial imagery subscription’ and provides color, infrared, thermal, and NDVI (Normalized Difference Vegetation Index – which determines the density of green on a patch of land).

Another California company, Puresense has developed software that gives farmers and ranchers real-time “irrigation intelligence.” This lets growers make more informed irrigation decisions, yielding water savings ranging from 5 to 20% as well as improved crop outcomes. The company is active in 10 states and Mexico, and growing.

As this drought and resultant water scarcity intensifies (which it most likely will), the value of water will increase. That, in turn, will intensify the hunt for solutions. California cannot afford to fail in tackling the water scarcity, which means that it will undoubtedly have to develop better technologies, business models, and water policies. These in turn will be exported to the rest of the U.S. and to the world. The sooner, the better.

The U.S. Drought Monitor is jointly produced by the National Drought Mitigation Center at the University of Nebraska-Lincoln, the United States Department of Agriculture, and the National Oceanic and Atmospheric Administration. Map courtesy of NDMC-UNL.